# People Who Bought Gold at the Bottom Have Collapsed!

Cherry Big House

In the past half month, people who bought gold at the bottom have been almost completely wiped out. Some watched the gold price fall from its $5,600 high to $4,800, thinking the opportunity had arrived, and decisively entered the market. Others believed that Middle East conflicts and geopolitical tensions meant gold must rise, and stubbornly bought more on every dip. Still others were brainwashed by central banks constantly buying gold, thinking there was always a floor no matter how far it fell. The reality proved extremely brutal:

On March 19 alone, international gold prices consecutively broke through $4,800, $4,700, and $4,600, dropping as low as nearly $4,500. Since the Iran-U.S. conflict erupted in late February, gold's maximum decline has exceeded 15%. Many ordinary domestic investors were stunned: just bought at the bottom in the morning, caught in a trap by afternoon. The more it fell, the more they bought, until their psychology collapsed, ultimately becoming high-position bag holders at the top. Where was the safe-haven asset? Where was the geopolitical conflict pushing up gold prices?

This wave has shattered many people's conventional wisdom. Indeed, the logic behind this round of gold decline is far too complex for many beginners to understand. Simply put, this isn't an unexpected drop or short-term shake-out, but an entire chain of linked logic mutually crushing the price.

**First, geopolitical conflict didn't save gold this time—it killed it.** People's fixed impression was that whenever conflict breaks out, gold rises. This time, it's completely reversed. Gold's high point for this round came almost the day the conflict erupted, followed by continuous declines and crashes.

The logic chain works like this: Middle East turmoil led to oil supply concerns, pushing Brent crude through $110. Oil prices are the mother of inflation; energy price increases drag up food, logistics, and industrial products across the board. Thus, U.S. February PPI inflation data massively exceeded expectations, hitting a one-year high.

By early morning March 19, Powell stated directly in his press conference: no rate cuts unless inflation makes progress. Gold is a non-yielding asset—holding gold provides no interest, no dividends, no cash flow. Previously, the market was betting on the Federal Reserve cutting rates 3 times in 2026, with capital pouring frantically into gold. Instead, the Fed laid their cards on the table: 11 committee members opposed rate cuts, only 1 supported cuts, 14 members believed at most 1 cut this year, or even no cuts. Combined with Powell's remarks, rate-cut expectations were directly eliminated. Higher rates will persist longer, and gold was abandoned first.

When rate-cut expectations fell from 3 cuts to 1, it meant the opportunity cost of holding gold extended directly by 6 to 9 months. For a $100,000 position, the annualized cost increased by $12,000. On March 19 alone, the 2-year U.S. Treasury yield spiked 10 basis points to 3.78%, hitting a seven-month high. When dollars, Treasury bonds, and deposits all offer high interest, holding gold that doesn't rise means losing money—this is opportunity cost. The allocation value of gold, a non-yielding asset, gets diluted. Simply put: previously, conflicts meant trading safe havens; now, conflicts mean trading inflation, inflation locks out rate cuts, and high rates kill gold.

This is the core truth behind why the more conflict erupts, the more gold prices fall. Many people's confidence in holding gold comes down to one sentence: "Central banks worldwide are all buying, what's there to fear?" But real data directly punctures this lie.

**First, the quantity of gold accumulated by central banks has crashed dramatically.** 2022–2024, global central banks bought over 1,000 tons annually; 2025 dropped directly to 863 tons; the first two months of 2026, global central bank gold purchases plummeted over 80% year-over-year.

Even China's central bank, which increased holdings for 16 consecutive months, only added minimal amounts in February. Although overall still net buyers, marginally the momentum isn't as strong. Additionally, in recent years, only a few countries like China, Turkey, Poland, and India have aggressively bought gold. Developed countries like the U.S., Germany, U.K., Japan, and Italy have barely increased holdings. Even Poland, which previously bought gold frantically, has publicly stated: gold profits are sufficient, and we're reducing positions to cash out and use funds for defense spending.

This will become the choice of increasingly more countries: gold prices at historical highs, buying large quantities again means poor value and excessive risk. According to Caixin data, the current bag holders have become retail investors, flooding in through ETFs, gold savings accounts, and bullion coins. Such investment demand has jumped from 20% historically to over 40%.

Meanwhile, institutions quietly reduce positions at high levels, cashing in profits while telling stories about central bank accumulation and safe-haven preservation, handing chips to retail investors. I checked the recent gold allocation positions of mainstream major institutions. In early 2025-2026, UBS, Bridgewater and other institutions' long-term research showed: 7%-8% gold allocation in multi-asset portfolios. But after the March 19 hawkish Federal Reserve decision, latest fund holdings from BlackRock, JPMorgan, Citi and others show: gold allocation reduced from 7%-8% to 3%-5%, establishing new neutral allocation ranges. The world's largest gold ETF (SPDR) reduced holdings by 28 tons in a single day, confirming institutions collectively reduced their positions.

Institutions always move faster than retail investors. If you examine market conditions more carefully, you'll discover an even crueler truth: **current global market liquidity is extremely tight.** Recently, institutions like BlackRock and Blackstone faced redemption waves with their funds being squeezed. Blackstone itself deployed $400 million to fill the hole, barely keeping things stable without blowing up. Large institutions must recover cash. Plus, as crude oil continuously surges, institutions are mobilizing more capital to chase soaring oil. Balancing everything, gold is also one of the most liquid assets globally—when you want to sell, you can sell anytime. Many large institutions profited substantially from gold earlier, and are collectively taking profits.

Thus emerges the most authentic reality: **it's not about being bearish on gold, it's about needing cash now**—whatever asset sells easily gets sold. Everyone dumps gold together, so prices naturally collapse. All this indicates:**this gold crash has nothing to do with safe havens, supply/demand, or long-term value. It's purely liquidity squeeze plus rate-expectation double-kill.**

After seeing all this, everyone should understand why gold has crashed this round, right? Only these are short-term factors. Financial markets lack such foresight—they only look ahead day-to-day. To solve immediate difficulties, everyone chose to abandon gold.

**Finally, after calming down, does gold still have value?**This crash doesn't mean gold's fundamentals collapsed; rather, it's been completely dominated by short-term rate expectations. But the key point is:**as long as Middle East conflict doesn't die down, oil prices stay elevated, and the Federal Reserve doesn't cut rates even once this year, gold will be repriced, and $4,500 may not hold.** $XAUUSD